Multicurrency and rating

In the base configuration, the rating engine creates cost data in the currency of the associated coverage. For cost data not associated with a coverage, including certain taxes, the rating engine uses the preferred settlement currency on the policy period. The rating engine returns the cost data to PolicyCenter. PolicyCenter creates costs from the cost data, populating the as-rated costs. PolicyCenter then converts the cost amounts to the settlement currency, populating the billing costs, and also saves a pointer to the exchange rate. PolicyCenter stores the settlement currency amounts on the costs. PolicyCenter uses these billing costs to calculate amounts to display on the Quote screen, for example, and to present a total cost for the policy.

For billing, PolicyCenter takes the as-rated amounts and computes transactions with amounts in the as-rated currency. Transactions represent changes in cost for billing. Using the same exchange rate, PolicyCenter converts the as-rated currency to the settlement currency and stores the amounts on the transaction. As with costs, the transaction has a pointer to the exchange rate.

Example

PolicyCenter maintains contractual data such as coverage terms, premium, taxes, and fees in the currency of the policy contract. In a multicurrency policy, rating may require a conversion from one currency to another.

The following example shows rating and currency conversion in a multicurrency policy.

As shown in the diagram above:
  1. In PolicyCenter, a policy has coverables with coverages in different currencies. (In the default configuration, all coverages on a coverable are in the same currency.) Two coverables have a coverage currency in U.S. dollars. One coverable has a coverage currency in euros.
  2. The rating engine rates the policy in the coverage currency for each coverage. The rating engine calculates taxes and surcharges in the settlement currency on the policy period.


As shown in the diagram above:
  1. The rating engine has rated the policy in the coverage currency for each coverage.
  2. PolicyCenter obtains the exchange rate from the Exchange Rate Service.
  3. PolicyCenter converts the as-rated coverage amounts to the settlement currency.
  4. PolicyCenter displays the policy premium, taxes, and surcharges in the settlement currency for the policy period. Using the same exchange rate, PolicyCenter creates billing transactions, and coverts the amounts to the settlement currency, if necessary.

    The policy stores:

    • Costs with the as-rated amounts the coverage currency and amounts in the settlement currency.
    • The exchange rate
    • Billing transactions with amounts in the coverage currency and settlement currency.

See also